Lynne Featherstone, the international development minister who was once equalities minister, took to Twitter to denounce Burchill – a freelance writer – for her "absolutely disgusting… rant against the transgender community". She described it as "a bigoted vomit" and called for The Observer to sack her.

Featherstone, a Lib-Dem MP, then suggested in another tweet that the paper's editor, John Mulholland, should be sacked too for publishing the column.

The online version of Burchill's column attracted more than 2,000 comments, with the majority opposing the writer, and the Twittersphere was deluged from yesterday morning onwards with people arguing for and against Burchill.

The heated debate prompted The Observer's readers' editor, Stephen Pritchard, to step in and announce that he will hold an inquiry into the matter. He wrote:

"As you might imagine, I have received many emails protesting about this piece this morning. Thank you to those who have written. I will be looking at this issue and will be replying to all in due course."

And Guardian News & Media also issued a statement. A spokeswoman said: "We acknowledge the strong reaction to Julie Burchill's piece published in The Observer. As indicated by Observer editor John Mulholland on Twitter, we are taking such reactions extremely seriously and we have asked our independent readers' editor to urgently investigate the matter."

Burchill's piece was written in defence of her friend and fellow writer, Suzanne Moore, who attracted hostility on Twitter for suggesting in a New Statesman article that women were too often expected to look like "a Brazilian transsexual". Moore then said she was quitting the social networking site because of the abuse she had received.

In her column, Burchill wrote of transgender people as "screaming mimis", "bed-wetters in bad wigs" and "dicks in chicks' clothing". She added that "the very vociferous transsexual lobby and their grim groupies" reminded her of "wretched inner-city kids who shoot another inner-city kid dead in a fast-food shop for not showing them enough 'respect'".

She also compared the attacks on Moore to "the Black and White Minstrels telling Usain Bolt how to run".

Observer readers responded by describing Burchill's attack on transgender people as "vile, "shameful" and "disgusting".